Feeding the Deficit: The Ultimate Obesity

Controlling obesity is all the rage now in America as, indeed, it should be. Feeding the American appetite with too many of the wrong kinds of calories is exacting a terrible toll on the health of Americans of all ages. Obesity, like cigarettes, kills. In recent years, Congress, along with a compliant President Bush and now with an enthusiastic President Obama, has been appeasing another kind of appetite with reckless abandon. The toll this fiscal obesity will exact from America and our people is incalculable and Jenny Craig will be of no help.

Clearly, most Americans do not want to be force fed programs they haven’t asked for and that they know neither they, their children nor their grandchildren can possibly afford. People throughout the country are beginning to dig in their heels and a growing number of congressmen and senators know it. Seventy years ago, Japanese Admiral Isoroku Yamamoto is quoted, following his successful and deadly attack on Pearl Harbor, “I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve.” It appears that the American electorate, long apathetic and used to acquiescing by default to reckless government spending may be awakening from its long slumber. Let’s hope so, for it is the last best hope we have to rein in the destructive behavior of so many of our elected representatives of both parties in Washington and the White House strategists who lead them on.

As we noted in this column two weeks ago, Moody’s has fired the first warning shot over the bow of our ship of state. The international credit-rating agency warned that America’s AAA credit rating would be in jeopardy (given our spiraling debt) if economic growth does not keep pace with the projections made by the Obama Administration. China and Japan, our largest sovereign creditors, fired two more warning shots at last week’s treasury auction when they decreased their purchases of U.S. debt. But is anyone in Washington listening?

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Tags: bank bailout, carmen reinhart, Christina Romer, deficit spending, entitlement spending
Posted Mar 3rd 2010 at 3:11 pm in Congress, Culture, Economics, News, Politics, federal spending | 83778138 Commentshttp://biggovernment.com/oftheeising/2010/03/03/feeding-the-deficit-the-ultimate-obesity/Feeding+the+Deficit%3A+The+Ultimate+Obesity2010-03-03+23%3A11%3A14Of+Thee+I+Sing+1776

Fiscal Death by Welfare

Ironically enough, the medicine applied by our state as the antidote for our ills has proven to be poison.  The welfare state is killing our nation.  Today entitlement spending makes up nearly half of our budget.  Long term, we know that there will be no way to pay off our unfunded obligations — we will go bankrupt.  There will be three options ultimately, though ultimately can come quite suddenly: default, hyperinflation or abolition of the welfare state.

Default is considered by many to be an impossible option as it would likely lead to mass chaos given the necessary suspension of many government services, not to mention the practical reality that WE are the collateral in the event of default.  To default is to be honest, and to be honest is anathema to the state.

Hyperinflation in my view is the most likely outcome given the massive increase in the money supply, which is good for politicians until it hits because it allows them to kick problems down the road and impose a stealth tax.  Currently, government is toeing the line between monetizing debt and intervening to keep its borrowing rates down, while incentivizing banks to keep money in their vaults or pump it into the stock market.

I believe that as the downturn goes on the government will blame the banks for the lack of economic growth and force them to allocate credit to chosen political entrepreneurs and other bad credit risks, leading to massive inflation in prices which they will likely blame on evil speculators and greedy price gouging companies.  Hyperinflation would allow the government to pay for the welfare state –  by writing entitlement checks in worthless dollars and lead to economic paralysis as constantly rising prices would make economic calculation and thus commerce impossible.

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Tags: CPAC, default, entitlement spending, entitlements, George Will
Posted Feb 28th 2010 at 5:01 pm in Congress, Culture, History, Politics, Tax Reform, Tea Party, federal spending | 79742129 Commentshttp://biggovernment.com/amellon/2010/02/28/fiscal-death-by-welfare/Fiscal+Death+by+Welfare2010-03-01+01%3A01%3A46Andrew+Mellon

Wednesday Open Thread: Spending Edition

From the fine folks at CATO Institute comes this chart, detailing the allocation of federal spending:

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Tags: debt interest, entitlement spending, federal spending, GDP
Posted Feb 3rd 2010 at 3:08 am in Open Threads | 6906276 Commentshttp://biggovernment.com/publius/2010/02/03/wednesday-open-thread-spending-edition/Wednesday+Open+Thread%3A+Spending+Edition2010-02-03+11%3A08%3A38Publius

The Feds Are Out of Money: Healthcare Is Their New Bank

It is mentioned, almost in passing, that the “healthcare reform” on the verge of becoming law starts collecting premiums and taxes immediately, and promises benefits only in about four years.

What kind of emergency is that?

It’s not a healthcare emergency. It’s what might be called a Madoff emergency.

Whether starry-eyed utopians or cynical malefactors, the unnamed, possibly unnameable they have high ambitions for Washington to achieve their objectives. The stars are aligned for their coup d’etat, but there is one little problem: the country is out of money.

This problem threatens to stop not only their agenda, but the whole game. Washington has 2 million employees on the payroll, earning on average twice as much as those in the private sector. And probably more than a hundred million dependents—recipients of Social Security, Medicare, Medicaid, and grants and subsidies of all types. What happens if the checks stop coming?

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Tags: David Brooks, entitlement spending, government health care, health care spending, ObamaCare
Posted Jan 22nd 2010 at 10:59 am in Congress, Healthcare, Politics | 6387480 Commentshttp://biggovernment.com/jorient/2010/01/22/the-feds-are-out-of-money-healthcare-is-their-new-bank/The+Feds+Are+Out+of+Money%3A+Healthcare+Is+Their+New+Bank2010-01-22+18%3A59%3A57Dr.+Jane+Orient

OMB’s Orzag Was Against Deficits Before He Was For Them

Just came across some rather grim analysis of the economic impact of massive, ongoing federal budget deficits from a group of prominent economists. It’s a little dated (2004) but still highly relevant considering that the deficit situation has dramatically worsened since then. Some highlights:

Substantial ongoing deficits may severely and adversely affect expectations and confidence, which in turn can generate a self-reinforcing negative cycle among the underlying fiscal deficit, financial markets, and the real economy:

• As traders, investors, and creditors become increasingly concerned that the government would resort to high inflation to reduce the real value of government debt or that a fiscal deadlock with unpredictable consequences would arise, investor confidence may be severely undermined;
• The fiscal and current account imbalances may also cause a loss of confidence among participants in foreign exchange markets and in international credit markets, as participants in those markets become alarmed not only by the ongoing budget deficits but also by related large current account deficits;
• The loss of investor and creditor confidence, both at home and abroad, may cause investors and creditors to reallocate funds away from dollar-based investments, causing a depreciation of the exchange rate, and to demand sharply higher interest rates on U.S. government debt;

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Tags: Allen Sinai, Brookings Institution, budget, Cato Institute, Deficit
Posted Dec 11th 2009 at 11:29 am in Congress, Economics, News, Politics | 4462612 Commentshttp://biggovernment.com/mrichmond/2009/12/11/ombs-orzag-was-against-deficits-before-he-was-for-them/OMB%27s+Orzag+Was+Against+Deficits+Before+He+Was+For+Them2009-12-11+19%3A29%3A21Morgen++Richmond

America Needs More Jobs, Not More Debt

Last week, as the national debt topped $12 trillion for the first time in U.S. history, one influential policymaker said, “I think it is important, though, to recognize if we keep on adding to the debt … that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession.”

This analysis was delivered by President Barack Obama, on whose watch “red ink as far as the eye can see” has become the status quo.

While mostly accurate, President Obama’s comments actually miss the fact that our rapidly decaying fiscal situation has already undermined confidence in the U.S. economy.  Washington Democrats saw to that with a trillion-dollar ‘stimulus’ that was supposed to be about creating jobs, but has instead produced countless examples of wasteful government spending while more than three million more Americans have lost their jobs.

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Tags: Barack Obama, concord coalition, debt ceiling, deficit spending, entitlement spending
Posted Nov 25th 2009 at 7:50 am in Economics, Featured Story, News, Politics | 3677883 Commentshttp://biggovernment.com/jboehner/2009/11/25/america-needs-more-jobs-not-more-debt/America+Needs+More+Jobs%2C+Not+More+Debt2009-11-25+14%3A50%3A25Rep.+John+Boehner